On Thursday 24 November, the European Court of Justice ("ECJ") rendered its decision in Scarlet v Sabam (C-70/10). The decision is in line with the Opinion of the Advocate General Cruz Villalón and therefore holds few surprises.
The case centers on questions referred by the Brussels Court of Appeal to the ECJ regarding Scarlet, an Internet Service Provider ("ISP"). Scarlet was ordered by a Belgian court to make it impossible for its customers to share files that infringe rights held by members of SABAM, the Belgian Society of Authors, Composers and Publishers.
The ECJ held that EU law rules out the possibility for a national court to impose an injunction that requires ISPs to install a filtering system:
(i) that checks all electronic communications passing via its services (in particular p2p traffic);
(ii) which applies indiscriminately to all its customers;
(iii) as a preventive measure;
(iv) exclusively at its own expense; and
(v) for an unlimited period of time.
It is not surprising that the ECJ considers such a broad injunction in fact as a general monitoring obligation, which is explicitly prohibited by Art 15 of the E-Commerce Directive. Furthermore, the ECJ ruled that the effects of the filtering injunction could also infringe fundamental rights safeguarded by the Charter of Fundamental Rights of the EU, in particular the right to conduct business, the right to protection of data and the freedom to receive or disseminate information.
In practice, the implications of the decision seem limited. This is mainly due to the fact that the decision of the ECJ relates to a very general and indiscriminate filtering system that actually checks all communications of the ISP customers. This is not something that is commonly claimed, at least in The Netherlands.
It remains to be seen what the exact implications of this decision will be for similar pending proceedings. Guidance can, however, still be found in L'Oreal/Ebay, as also indicated by the ECJ in its decision. In keeping with L'Oreal/Ebay, the ECJ held that ISPs indeed are subject to an extensive duty of care in combatting online infringement of intellectual property rights. In this respect, national courts may order such providers to take measures to not only end infringements but also to prevent further infringements. It is a matter of striking the right balance of interests.
We are more than happy to discuss the possible impact this decision may have.